Tapestry Q2 Earnings Beat, Gross Margin Rises Y/Y, FY25 View Hiked

Core Insights - Tapestry, Inc. reported strong second-quarter fiscal 2025 results, surpassing Zacks Consensus Estimates for both revenues and earnings, leading to an upward revision of its fiscal 2025 outlook [1][4][16] Financial Performance - Adjusted earnings for the fiscal second quarter were $2.00 per share, exceeding the consensus estimate of $1.74 and up from $1.63 year-over-year [4] - Net sales reached $2,195.4 million, beating the consensus estimate of $2,108 million, reflecting a 5.3% year-over-year increase [4] - Consolidated gross profit was $1.63 billion, a 9.4% increase from the previous year, with a gross margin of 74.4%, up 280 basis points [9] Customer and Sales Growth - The company added 2.7 million customers in North America, with over half from Gen Z and Millennial demographics [5] - Direct-to-consumer sales grew by 4%, driven by high-single-digit growth in digital sales and a low-single-digit increase in global brick-and-mortar sales [5] Brand Performance - Coach's net sales were $1.71 billion, an 11% year-over-year increase, while Kate Spade's sales were $416.4 million, marking a 10% decline [6] - Stuart Weitzman's net sales totaled $69.7 million, a 15% year-over-year decrease [7] Regional Sales Insights - North American sales increased by 4% to $1.51 billion, while sales in Greater China improved by 3% to $272.8 million [8] - European markets showed significant growth with a 45% increase in revenues to $129.3 million [8] Cost and Margin Analysis - Adjusted operating income was $548.2 million, up 15.2% from the previous year, with an adjusted operating margin of 25% [10] - Selling, general and administrative expenses totaled $1.08 billion, up 6.6% year-over-year, but as a percentage of net sales, it decreased by 60 basis points to 49.4% [10] Cash Flow and Shareholder Returns - The company ended the quarter with cash and short-term investments of $1 billion and long-term debt of $2.38 billion [12] - Tapestry anticipates returning over $2 billion to shareholders in fiscal 2025 through dividends and share repurchases [14] Future Outlook - Tapestry raised its fiscal 2025 revenue outlook to $6.85 billion, suggesting a 3% growth from the prior year [16] - Earnings per share are forecasted between $4.85 and $4.90, indicating a 13-14% growth from the previous year [17]